The York Water Company Reports 2023 Annual And Fourth Quarter Results

Rhea-AI Summary

The York Water Company (YORW) reported strong financial results for 2023, with operating revenues of $71,031,000 and net income of $23,757,000 showing significant increases compared to 2022. President Hand highlighted growth in revenues due to rate increases and a larger customer base, partially offset by higher expenses. The company invested heavily in infrastructure improvements, including pipe replacements and dam construction. Plans for 2024 and 2025 include further investments for system upgrades and expansion.

Positive

• Strong financial performance in 2023 with operating revenues of $71,031,000 and net income of $23,757,000.
• Basic and Diluted Earnings per share of $1.66 for 2023 increased $0.26 compared to 2022.
• Dividends per share rose 4% compared to 2022.
• Increased revenues attributed to rate hikes and customer base growth, offset by higher expenses.
• Significant investments in infrastructure improvements, including pipe replacements and dam construction.
• Plans for 2024 and 2025 include further investments for system upgrades and expansion.

Negative

• None.

Financial Analyst

The reported increase in operating revenues and net income for The York Water Company suggests a robust financial performance in 2023, which is likely to be well-received by investors. The growth in revenues can be attributed to the rate increase effective from March 2023, despite the reset of the DSIC. It's important to note that the DSIC mechanism allows for the recovery of costs associated with infrastructure replacement, which is essential for maintaining service quality. The increase in the customer base also underscores the company's expansion and potential for market penetration.

The reported dividend increase is a positive signal to shareholders, reflecting the company's commitment to returning value. It also suggests confidence in the company's ongoing financial health and stability. However, investors should be cognizant of the rise in operation and maintenance expenses and depreciation, which could impact future profitability if not managed effectively. The increase in income taxes due to higher taxable income, although partially offset by deductions, is another area for investor scrutiny.

Investments in infrastructure, such as the spillway replacement and wastewater treatment plant construction, are critical for long-term sustainability and regulatory compliance. These capital expenditures are significant as they contribute to the company's asset base and can lead to increased depreciation expenses. However, they also potentially enhance the company's operational efficiency and service quality, which can drive long-term growth.

Market Research Analyst

The strategic investments outlined by The York Water Company, totaling over $42 million for 2024 and $46 million for 2025, indicate a forward-looking approach to capital expenditure. The focus on main extensions, dam spillway replacement and wastewater treatment plant construction demonstrates a commitment to infrastructure modernization, which is critical for utility companies. These investments can lead to enhanced competitive positioning within the sector by improving the reliability and quality of service.

From a market perspective, the growth in the customer base is a key indicator of the company's market expansion and the potential for increased market share. Additionally, the company's plan to upgrade its enterprise software system could result in improved operational efficiency and customer service, which are vital components of customer retention and satisfaction in the utility industry.

The detailed capital expenditure plan also provides transparency for investors and stakeholders, enabling them to assess the company's growth strategy and capital allocation efficiency. This level of detail is beneficial for market analysis and can influence investor confidence in the company's management and strategic direction.

Economist

The financial results of The York Water Company reflect broader economic trends, such as inflationary pressures leading to rate increases. The company's ability to successfully implement a rate increase in March 2023 is indicative of an economic environment where such actions are necessary to maintain profitability amidst rising costs. The reset of the DSIC to zero, while potentially reducing short-term revenue, aligns with regulatory frameworks designed to balance utility investments with customer affordability.

The company's ongoing capital investments in infrastructure are essential for long-term economic sustainability, particularly in the utility sector where aging infrastructure can lead to inefficiencies and increased costs. These investments can have a ripple effect on the local economy, potentially creating jobs and stimulating economic activity through construction and maintenance projects.

However, the impact of increased operation and maintenance expenses on the company's cost structure should be monitored. If these expenses grow at a rate outpacing revenue growth, it could signal inefficiencies or rising costs that may not be fully recoverable through future rate increases, which could have long-term economic implications for the company.

YORK, Pa., March 05, 2024 (GLOBE NEWSWIRE) -- The York Water Company's (NASDAQ:YORW) President and CEO, JT Hand, announced the Company's 2023 financial results.

President Hand reported that 2023 operating revenues of $71,031,000 increased $10,970,000 and net income of $23,757,000 increased $4,177,000 compared to 2022. Basic and Diluted Earnings per share of $1.66 for 2023 increased $0.26 compared to 2022. Dividends per share rose 4% compared to 2022.   Increased revenues were primarily due to an increase in rates effective March 1, 2023 partially offset by a reset to zero of the Distribution System Improvement Charge (DSIC). The DSIC is a Pennsylvania Public Utility Commission allowed charge that water utilities collect from customers for the replacement of aging infrastructure.   Growth in the customer base also added to revenues. The increased revenue was partially offset by higher operation and maintenance expenses and depreciation. Income taxes increased due to higher taxable income partially offset by higher deductions from the IRS tangible property regulations.

During the year, the Company invested $64.6 million in construction expenditures for armoring and replacing the spillway of the Lake Williams dam, wastewater treatment plant construction, and routine items, as well as various replacements and improvements to infrastructure. During 2023, the Company replaced approximately 50,200 feet of pipe to improve its distribution system, reduce ongoing expenses, and improve customer service. In addition, the Company invested a combined $625,000 in the acquisition of a water and wastewater system.

President Hand also reported that for the fourth quarter of 2023 operating revenues increased $2,985,000 and net income increased $1,001,000 compared to the fourth quarter of 2022. Basic and Diluted Earnings per share of $0.42 for the fourth quarter of 2023 increased $0.07 compared to the same period last year. Increased revenues were primarily due to an increase in rates effective March 1, 2023 partially offset by a reset to zero of the DSIC. Growth in the customer base also added to revenues. The increased revenue was partially offset by higher operation and maintenance expenses and depreciation.

President Hand reported that York Water plans to invest approximately $42.2 million in 2024 and $46.1 million in 2025, excluding acquisitions, for additional main extensions, completion of armoring and replacing the spillway of the Lake Williams dam, wastewater treatment plant construction, an upgrade to the enterprise software system, and improvements to its pipes, service lines, and other facilities to ensure a safe, adequate, and reliable supply of drinking water and to maintain proper handling and disposal of wastewater for the Company’s growing customer base.

	Period Ended December 31
	In 000's (except per share)
	Quarter				Twelve Months
		2023		2022		2023		2022
Operating Revenues	$	18,096	$	15,111	$	71,031	$	60,061
Net Income	$	6,012	$	5,011	$	23,757	$	19,580
Average Number of Common Shares Outstanding		14,314		14,266		14,295		13,958
Basic and Diluted Earnings Per Common Share	$	0.42	$	0.35	$	1.66	$	1.40
Dividends Declared Per Common Share	$	0.2108	$	0.2027	$	0.8189	$	0.7874

This news release may contain forward-looking statements regarding the Company’s operational and financial expectations. These statements are based on currently available information and are subject to risks, uncertainties, and other events which could cause the Company’s actual results to be materially different from the results described in this statement. The Company undertakes no duty to update any forward-looking statement.

FAQ

What were The York Water Company's operating revenues for 2023?

The York Water Company's operating revenues for 2023 were $71,031,000.

How much did net income increase in 2023 compared to 2022?

The net income increased by $4,177,000 in 2023 compared to 2022.

What contributed to the increased revenues in 2023?

The increased revenues in 2023 were primarily due to rate increases and a larger customer base.

What were the key investments made by The York Water Company in 2023?

The key investments in 2023 included construction expenditures for infrastructure improvements, pipe replacements, and dam construction.

What are the company's investment plans for 2024 and 2025?

The company plans to invest approximately $42.2 million in 2024 and $46.1 million in 2025 for system upgrades and expansion.